Inflation Begins Where Trust Ends

What’s behind the numbers?

The second CPI print delivered exactly what Wall Street ordered: a perfectly obedient +0.3% MoM and +2.4% YoY—identical to last month because inflation apparently discovered the joys of consistency. But beneath that boring headline, food posted its fastest annual gain since September (and that’s before the fertilizer shortage even hits shelves), while energy bounced back from deflation to positive territory (also before oil prices properly spiked from the Middle East’s new hobby of disrupting global supply chains). Think of this as inflation’s well-behaved cousin showing up to the party right before the chaotic relatives arrive—enjoy this 2.4% while it lasts, because once fertilizer shortages and energy shocks actually hit the data, things are about to get significantly less consensus-friendly.

Core CPI delivered another thrilling episode of “everything’s fine“: +0.2% MoM and +2.5% YoY, perfectly matching forecasts and last month’s reading because consistency is key when you’re pretending inflation is under control. The real star of the show was core services—the heavyweight champ representing 76% of the inflation basket—which cooled to +2.21% YoY, its lowest reading since September 2021. Even the biggest troublemaker at the party is now politely sipping water and claiming they’re ready to leave early. Translation: the data is behaving beautifully right before shortages, energy spikes, and petrochemical supply chain chaos arrive fashionably late to ruin everything. Enjoy this brief moment of illusory calm.

Cue the standing ovation from the “Inflation Is Dead” cheerleaders: Owners’ Equivalent Rent—the CPI’s favourite zombie metric—shambled to +3.2% YoY in February, barely down from January but still its “coolest” reading since October 2021. Congratulations everyone, the undead are moving slightly slower! Sure, it’s still elevated enough to haunt your wallet, but hey, at least the zombie is limping instead of sprinting. Progress!

Adding to the “inflation is totally dead, trust us” narrative: SuperCore CPI—core services ex-housing, or as the Fed calls it, “the only number that matters when we need good news“—just reaccelerated to +2.75% YoY from January’s briefly encouraging +2.67%. We’re back to April 2025 levels, folks! Translation: that wasn’t ‘Mission Accomplished’, just a smoke break. But sure, keep telling yourself inflation is defeated—just ignore rent, goods, food, energy, and basic math, refill your daily dose of ‘hopium’, and everything will be fine. The emperor’s new clothes are looking fabulous.

Market reactions.

Stocks threw a collective shrug on Wednesday, refusing to get too excited about the CPI data — because why celebrate good news when rising oil prices are right there ready to ruin the party? The Nasdaq, clearly the overachiever of the group, managed to outperform both the Dow Jones and the S&P 500, which spent most of the day staring blankly at the inflation report before deciding it was basically yesterday’s news anyway — quite literally.

With Trump’s stagflation special now firmly on the menu, Wall Street has quietly shelved the rate-cut fantasy — the market is down to pricing in a grand total of two cuts for the year. But anyone who’s actually studied a business cycle knows the Fed’s real next move is a hike, not a cut — because nothing says “welcome to stagflation” like a central bank that’s perpetually late to the party and somehow still manages to walk in with the wrong gift.

The dollar flexed on most major currencies Wednesday, drawing support from the Strait of Hormuz saga — which, like that one houseguest who just won’t leave, shows absolutely no signs of wrapping up anytime soon.

Gold keeps doing what Gold does best — dancing gleefully to the endless drumbeat of bankers’ wars, a playlist that, conveniently, never stops playing and only gets louder. For the precious metal, every new conflict is essentially a free marketing campaign, and business, as always, is booming.

As stagflation takes centre stage and Washington continues weaponizing the dollar against anyone who dares colour outside its geopolitical doctrine, the 10-year yield keeps marching higher — a slow, painful reminder that the asset the whole world was once told was “risk-free” may turn out to be the biggest risk of them all.

Thoughts.

February’s CPI will undoubtedly be celebrated as a historic victory—complete with PowerPoint slides and victory dances on Truth Social—proving once again that inflation has been “defeated.” Never mind that the data is already more obsolete than a floppy disk, considering oil prices have jumped nearly 30% since Epic Fury turned the Middle East into a holy war theme park with no exit strategy and no winners. For regular Americans not affiliated with the Malthusian Washington Swamp plutocracy, grocery prices keep creeping higher, and with energy costs spiking, that whole “disinflation” story is quickly becoming historical fiction. Inflation hasn’t vanished—it’s just catching its breath before sprinting again. While policymakers and market cheerleaders toast “cooling data” and plot their next regime-change money grab, actual households are getting squeezed like never before. Meanwhile, political pressure on central banks and the insatiable appetite for expansive fiscal spending guarantee that reflationary forces stay in full swing. Because here’s the thing: inflation and eroding institutional trust tend to move together like terrible dance partners, even while official narratives insist everything’s absolutely fine. Nothing to see here, folks—just keep believing those government statistics while your grocery bill says otherwise.

US Umbrella inflation Index (Average of CPI; Core CPI; PPI; Core PPI; Core PCE, 1-year consumer inflation expectations)

Instead of fantasizing about 2% inflation like it’s a campaign promise, seasoned investors—unlike Wall Street’s finest—can still perform elementary school math:

• For that miracle to materialize by end of 2026, CPI would need to print below 0.2% every single month. Good luck achieving that with a newly politicized Fed chair getting coronated and wars spreading faster than a viral TikTok.

• At more realistic 0.3%+ monthly prints, we’re cruising toward 2.88%–6.00% CPI by year’s end.

And when that reality check arrives, not even Donald Copperfield pulling a “Central Banker-in-Chief” rabbit out of his MAGA hat will disguise the fact that cutting rates into an inflationary boom ranks among the Fed’s dumber magic tricks. Bonus points: all those lovely shortages will spiral inflation right into mid-term election season, where not a single Manipulator-in-Chief will be able to hide from angry voters wondering why their grocery bill doubled. Abracadabra, your purchasing power disappeared in the Straits of Hormuz!

Inflation is not born in spreadsheets, young grasshopper. It rises when trust withers and scarcity knock at the door. Money alone cannot make prices soar; confidence must also flee. When energy tightens, labour thins, and governments fumble with controls or creative accounting, every purchase becomes a pre-emptive strike, every wage a shield, every investment a cautious step. Inflation then dances, not because of policy, but because people no longer believe in it—yet insist, with great optimism, that this time is different. It never is. Scarcity whispers, mistrust shouts, and policy trips over itself. True inflation, like a wise teacher, shows itself when the system is no longer trusted.

Trust isn’t just a warm, fuzzy feeling—it’s an economic ingredient, like salt in soup: too little, and everything tastes off. When households trust institutions, they save instead of splurging, believing tomorrow won’t be a surprise horror show. When businesses trust policies, they invest for the long haul instead of hoarding cash like squirrels. When investors trust central banks, they actually price assets with some sense of calm instead of panic.

But when trust breaks? The system goes haywire: money races around faster than a caffeinated rabbit, prices climb because fear replaces logic, risk premiums puff up like overinflated balloons, and everyone suddenly becomes short-term obsessed. Inflation stops being a boring economic cycle—it becomes behavioural chaos. That’s why rate hikes sometimes feel like shouting into a hurricane, and why official numbers always seem to lag the ...

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